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According to Steven Chu, the U.S. Secretary of Energy and a Nobel physicist, “The most direct way to reduce our dependency on foreign oil is to simply use less of it.” That makes sense. The arguments in support of energy independence, however, do not.

We hear that “[e]nergy independence means energy security (supply and price stability).” But restricting oil supply to within U.S. borders is more likely to increase instability than decrease it. We typically think of a diversified financial portfolio as stabilizing investment value. A shock impacting one market sector and, hence, investments in that sector, is less likely to have a significant impact on a diversified portfolio. The same is true with energy. If there is a shock in one region, say, the United States (remember Hurricane Katrina), having a diversified supply portfolio can help stabilize available resources and therefore price. Restricting supply to a specific region means shocks to that region are likely to have a significant impact on resource availability and price.

Consider this:

Despite its immense appeal, energy independence is a nonstarter—a populist charade masquerading as energy strategy that's no more likely to succeed (and could be even more damaging) than it was when Nixon declared war on foreign oil in the 1970s.

Sounds right-wing but this statement is from Mother Jones. The author, Paul Roberts, is smart enough to have figured out that many of the government backed alternative energy sources have secondary consequences that may in fact be worse than energy dependence.

He goes onto say:

nearly every major energy innovation of the last century—from our cars to transmission lines—was itself built with cheap energy.

Indeed, cheap energy and innovation have brought us great prosperity.

Nonetheless, “between 2001 and 2006 the number of media references to 'energy independence' jumped by a factor of eight,” and energy independence is continually emphasized by politicians. Why is energy independence so appealing? “[B]ecause it offers political cover for a whole range of controversial initiatives,” says Roberts. Though the Mother Jones article is four years ago, these statements still make good sense. Energy independence is a proverbial icon that provides votes for politicians but does little to stabilize energy prices or supply.

Matt Ridley recently discussed the tendency for regulators to fall victim to the "affect heuristic," or the propensity to "discount the drawbacks of things we are emotionally in favor of." Case in point: the $2 billion Ivanpah Solar Electric Generating System being built on federal land in California's Mojave Desert.

Officials are breaking ground today on what will become the world's largest solar thermal electricity project — a series of 346,000 billboard-sized mirrors directing heat onto a solar tower powering a turbine. But as the LA Times reports, not everyone is thrilled:

Environmentalists fought the project for years, concerned about its effect on the habitat of a rare tortoise. Others see the developer, Oakland-based BrightSource Energy Inc., as just another "Big Solar" corporation chasing down profits on the public dime.

"It's the old centralized robber-baron monopoly model," said Sheila Bowers, an activist with the advocacy group Solar Done Right. "This is the worst way to go about getting clean energy — it's slow, it's remote, it's devastating to the environment, and taxpayers are footing most of the bill."

As the Timesreported earlier this month, "an estimated 17 federally threatened tortoises — and an unknown number of half-dollar-sized hatchlings" were in danger of being "squashed by heavy equipment" in the initial project area. In response to these concerns, biologists have been attempting to relocate the tortoises from the project site — an effort that is dubious at best.

Tortoise translocation is still an experimental strategy with a dismal track record. In previous efforts, transported tortoises have shown a tendency to wander, sometimes for miles, often back toward the habitat in which they were found. The stress of handling and adapting to unfamiliar terrain renders the reptiles vulnerable to potentially lethal threats: predation by dogs, ravens and coyotes; respiratory disease, dehydration and being hit by vehicles.

Nevertheless, unlike the delta smelt or the kangaroo rat (which merely halted housing development and diverted water away from farmers) a threatened tortoise just isn't good enough for regulators to pass up a trendy solar project. And ensuring that all the tortoises have been removed before construction begins is unlikely. State and federal regulators have put solar thermal projects on a path for fast-track approval. In order to qualify for lucrative federal financial incentives, companies must break ground on projects or spend 5% of construction costs by year's end.

When it comes to politically glamorous projects like solar power plants, even a federally protected species isn't safe.

There is a battle brewing between the energy industry and environmentalists concerning the dangers of removing natural gas from shale using a process called hydraulic fracturing, or fracking.

Fracking involves pushing millions of gallons of water (mixed with sand and chemicals) through wells at high pressure to fracture the shale. Roughly half the fracking fluid remains in the ground. The rest of it comes back out of the well and is considered industrial waste.

This process has been around for more than 60 years. But only in the past several years, with the rising cost of fossil fuels, has it been determined to be cost effective.

Given that fracking is relatively new to the scene many people can’t say if they support this process. The positive economic impact of natural gas drilling is proven, but if this process is contaminating local aquifers there may be unintended consequences, which bring us to property rights.

If there are problems, for example, who is liable, the surface owner or the owner of the lease for sub-surface mineral rights? I would love to read more about hydrofracking and nuisance law or impacts on tribal lands.

One of the few people raising concerns associated with property rights and fracking is Idaho Statesman reporter (and former PERC media fellow) Rocky Barker.

Company officials told the Legislature that they were negotiating both subsurface leases and surface use agreements. But landowners should be sure the agreements they sign protect their rights, experts said.

Another key issue the oil and gas conservation commission will have to address is unitizing the gas field for development. This process, which delineates how the subsurface resource is divided, is ripe for gerrymandering that could cut mineral right owners out on royalties.

According to the U.S. Bureau of land management, wind power is the fastest growing energy technology in the United States. With this growth comes the desire to develop a legal framework for wind rights.

Today at PERC, Daniel Kaffine, with the Colorado School of Mines, explored the legal status of wind collection rights. Wind can be compared to other resources such as water and oil, but it is most often compared to mineral rights. Indeed, there is some legal precedent that argues that a mineral rights framework can be applied to wind rights. In Contra Costa Water District v. Vaquero Farms (1997), the California appellate court held that the right to harness wind for electricity constitutes a wind right that is severable from surface rights.

As Kaffine asks, “If the mineral rights framework is an appropriate analog for wind power, the question arises: should wind rights be severable from surface rights?” Some states such as Colorado think no. Other states such as Wyoming think yes. What do you think?

Denis and Barbara Prager fear the day that hydraulic fracturing takes place on their land in the Shields Valley of Montana. The threat of ‘fracking’ is real and there is nothing they can do. While the Prager’s own the surface rights to their property, the state owns the subsurface and mineral rights. The state has the right to use the land as is ‘reasonably necessary’ for drilling or can lease the mineral rights to a private company. Those rights are presently open for bid.

Hundreds of millions of acres of property across the nation have secure property rights that are split; different entities own the surface and subsurface rights. Battles over split estate rights emphasize the importance of well specified and defined rights. Perhaps most important is the knowledge of what rights the surface owner does and does not have.

Under split estate rules, subsurface owners have the right to use surface land as is ‘reasonably necessary’ to develop subsurface assets. Private oil and gas companies often lease rights from subsurface owners regardless of whether the estate is split or under single ownership. Either way, drilling and extraction companies are responsible for unnecessary harm done, impacting water quality, for example.

Though hydraulic fracturing has been going on for more than 60 years, it has gained recent attention due to its affordability in the current global economic and technological climate. It is interesting that while many environmentalists vie to decrease carbon emissions, they are also opposed to fracking. In truth, natural gas may be one of the greatest boons to keep America energized at low cost with fewer emissions. Given secure property rights and market transparency it can be environmentally friendly, to boot.

Why are we drilling for oil 40 miles offshore and thousands of feet underwater? This AP article claims that the answer is simply the world's unquenchable demand for oil:

The world's thirst for crude is leading oil exploration companies into ever deeper waters and ventures fraught with environmental and political peril. The days when the industry could merely drill on land and wait for the oil — and the profits — to flow are coming to an end.

But is it merely the demand for oil that is causing us to drill risky deep-water wells? Hardly. What the AP fails to mention are the various policies in place that encourage oil companies to drill in such dangerous locations.

As Terry Anderson pointed out this summer, part of answer lies in NIMBY— "not in my backyard"—policies. Drilling can be done much safer onshore, but policies forbidding energy development on land drive it to areas where the effects of spills are more deleterious. Nearly 80% of potentially oil-rich offshore lands and 60% of onshore lands are off limits to oil and gas development.

Another missing piece in the AP's story is the 1990 Oil Pollution Act (OPA), which caps the liability of drillers at a paltry $75 million in the event of a spill. This undoubtedly encourages drilling in more risky deep-water locations. And, as Michael Greenstone of the Brookings Institute put it, "The cap effectively subsidizes drilling and substandard safety investments in the very locations where the damages from spills would be greatest." Congress has failed to raise this liability cap (BP, however, has waived its right to this cap and is vowing to pay all legitimate claims).

In short, we are not running out of oil. The unintended consequences of energy policies are causing us to look for it in all the wrong places.

It is often believed, and in fact intended, that regulations requiring increased energy efficiency will reduce energy consumption. In reality, however, theoppositemay be true.

Look back to 1975, and the original Corporate Average Fuel Efficiency (CAFE) standards. The CAFE standards required increased fuel efficiency for cars from a fleet average of 18 miles per gallon in 1978 to 27.5 by 1990. Greater fuel efficiency, however, means less cost per mile driven, which encourages more driving. At the same time, many Americans shifted to larger vehicles, like small trucks and SUVs, for increased safety and more legroom. This also results in increased fuel use. Add to the deal a higher price for new vehicles to meet CAFE standards which leads to driving older vehicles for longer and, again, more fuel use. These areunintended consequencesof the required fuel efficiency standards that lead to increased, rather than decreased, gas use.

That doesn’t stop politicians, however, from setting ever higher standards. Current CAFE regulations require average fleet auto efficiency of 35 miles per gallon by 2020. Other energy efficiency standards are also coming to light – literally. The move toward requiring the use of compact fluorescent (CFL) LED lighting over incandescent is likely to have a similar effect. Because CFL and LED lighting are cheaper, use will increase.

Note that increased efficiency resulting in lower costs not only motivates increased use by current users. Lower costs also mean greater access to more people – people that previously had no access to lighting and energy. Energy availability in remote regions can enhance productivity and prosperity.

Call it “green-washing” if you like. Politicians respond to environmental concerns because it earns them votes. What seem to be green regulations, though, may not result in environmental improvement. Few voters understand the unintended consequences of such legislation. It is irrelevant whether politicians do or not.

The bottom line is that more efficient technologies don’t need to be imposed by law. Consumers and producers are drawn toward energy efficiency because it saves money. But don’t be fooled, increased energy efficiency may not coincide with a reduction in energy use; it is instead likely to result in increased energy consumption. When self determined, it does, however, coincide with enhanced quality of life.

"In an interview this week with VantagePoint Capital Partner and Founder Alan Salzman, he told me that he sees technology that can help solve the clean water issue for fracking as an upcoming hot area for investment. “We think the limiting factor for gas fracking is water. We’re not gas people, and we’re not oil people. But we are water people,” said Salzman...

A company called ABSMaterials has been working on the problem of cleaning liquids involved with fracking. The company uses sand-like particles to absorb chemicals, and the company says it can remove 99 percent of oil and grease from water in fracking fluid, and another 90 percent of the toxic chemicals like benzene and xylenes."

This video shows one of their products in action. As Lynne notes, this project and others are being funded in part by the Department of Energy. Her concluding discussion asks good questions:

"If fracking really is here to stay and growing, as Mike has discussed extensively, are these research subsidies necessary to induce innovation in water cleaning technologies? If so, on what basis? Is there a Coase problem here — does legal precedent fail to define legal liability sufficiently to clarify the profits attached to the water cleaning? Or, if that’s not the case, is the water cleaning insufficiently valuable to be worth doing? That hypothesis is consistent with the argument that fracking does not actually create a lot of water supply damage. But if that’s the case, then why subsidize the research — isn’t that a waste of taxpayer funding on research that isn’t likely to be valuable enough to be worth pursuing?"

Mike Giberson, also at Knowledge Problem, has been providing diligent and extensive analysis of fracking and energy markets more broadly from a market perspective, much of which can be found here.

Over millennia, plants and animals have adapted to changing climates by migrating to more favorable locales. If the climate continues to change in a manner consistent with current expectations, most warming will occur in the high latitudes. In order for plants and animals to adapt, large areas of habitat -- especially those along north-south gradients -- must be available for movement. This has direct implications for future energy policies.

As this piece in The New York Times illustrates (and an earlier post on the PERColator discusses), we should carefully consider the footprint our choices imply. In terms of sparing landscapes, energy sources with high energy densities (i.e., the amount of energy per unit of volume or mass) are important. Just as high-yield agriculture reduces pressure to convert native ecosystems to cropland, high-density fuels make it possible for the roughly 60 million residents of the United Kingdom to live on a small island while still protecting nearly a quarter of England’s landscape in National Parks and Areas of Outstanding Natural Beauty. Regarding electricity production, today only two sources fit this bill: fossil fuels and nuclear power. Of these two, which do you prefer?

Last Saturday night (March 26) was Earth Hour. A time that, presumably, billions of people turn out their lights to support energy conservation. Hilton Worldwide, among other hotels and businesses, claim to participate in this celebration.

In its fifth year, Earth Hour was designed for people to show their support for sustainable actions. How could anybody oppose such a simple act or environmental sustainability itself?

Often there is more than meets the eye. That is my impetus to blog; not to dwell on what is seen, rather to point out what is often not seen, as so eloquently described byFrederic Bastiatmore than 100 years ago.

Rather than reiterate here what others have already said, I will merely redirect you to their points.

Ross McKitrick “abhors” Earth Hour because it demonizes electricity regardless of the benefits and increased prosperity that it provides.

Krishnancomments that resource use is often mistaken for waste even when it provides for increased well-being.

While many across the globe see more clearly with the lights on, the costs of energy and resource use are often emphasized more than the benefits. Benefits from energy use include increased prosperity, health, leisure, and education, even enhanced environmental quality. I commend resource conservation when it is efficient to do so. But a goal to merely reduce resource use is myopic.

As an interesting sideline, I stayed in a Hilton brand hotel in Montana this weekend and heard nary a word about Earth Hour.

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Founded 30 years ago in Bozeman, Montana, PERC—the Property and Environment Research Center—is the nation’s oldest and largest institute dedicated to improving environmental quality through property rights and markets.

The goal of PERC’s programs is to fully realize the vision of establishing “PERC University,” where scholars, students, policy makers, and others convene to expand the applications of free market environmentalism.

PERC's fellowships share a common goal of exposing new scholars, students, journalists, and policy makers to free market environmentalism, as well as enable scholars already familiar with FME to explore new applications.